ZURICH—
Roche Holding AG
on Friday said a late-stage study of its breast cancer drug Kadcyla failed to yield superior results to an existing treatment, damaging the outlook for stronger sales in one of its key drug markets.

The Basel-based company said a Phase III trial to evaluate the effectiveness of three drug combinations on patients with HER2-positive breast cancer yielded mixed results.

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Its Kadcyla drug used alone or in combination with its Perjeta treatment, and its Herceptin drug used with chemotherapy all helped patients live for a similar amount of time without the disease worsening.

However, the trials with Kadcyla weren’t significantly better than Herceptin, an existing treatment, used in combination with chemotherapy.

Analysts said the failure of the trial was disappointing news for Roche, prompting the company’s shares to drop nearly 6% in late trading.

The news also weighed on
ImmunoGen Inc.,
IMGN -0.94%
whose shares fell nearly 50% in morning trading in the U.S. Kadcyla includes a proprietary cancer-killing agent that is produced by ImmunoGen, according to the company’s website. ImmunoGen said the results would have no impact on its financial guidance for the year.

Kadcyla “is important in Roche’s life-cycle management of its breast cancer franchise because it should take over from Herceptin as a gold standard treatment,” said Chi Tran-Brändli, an analyst at J. Safra Sarasin, who rates the shares a buy.

Herceptin, also known by the generic name trastuzumab, is one of Roche’s biggest-selling drugs, and ranks as the company’s third-biggest seller. The drug, which will lose patent protection in the European Union next year, is used to treat patients with breast cancer and metastatic stomach cancer.

Roche said it had hoped the study would improve the survival rate for advanced breast cancer without resorting to traditional chemotherapy.

Roche also said it was discontinuing a late-stage study of gantenerumab, a drug to treat patients with early Alzheimer’s disease.

Roche had been testing gantenerumab as a potential agent for delaying progression of early-stage Alzheimer’s, a disease that affects about 44 million people world-wide.

The trial, which had enrolled 799 participants who were considered in a pre-dementia phase of the disease—exhibiting mild memory problems thought to be due to Alzheimer’s—was halted because an analysis of the data partway through the study suggested the compound was unlikely to demonstrate benefit. There were no new signs of safety issues compared to previous studies of the compound.

Roche said it was “disappointed” with the results but that it would use the study data for future research.

Alzheimer’s is a progressive disease in which changes to the brain are thought to begin some 10 to 15 years before the onset of noticeable memory problems. One theory favored by drug makers and some Alzheimer’s experts is that once symptoms become apparent, the disease has progressed too far for experimental therapies to have much of an impact. Intervention is most likely to be helpful if given as early on in the disease process as possible.

Roche’s setback raises questions about other Alzheimer’s drugs in development, several of which also are monoclonal antibodies that target a protein called amyloid considered important to the disease. These include another Roche compound called crenezumab, Eli Lilly & Co.’s solanezumab and
Biogen Idec
’s BIIB037, which are in or nearing late-stage clinical testing.

Timothy Anderson,
a global pharmaceuticals analyst at Sanford C. Bernstein & Co, LLC, said in a research note that Alzheimer’s therapeutic development is high risk but “not all hope is yet lost.”

Roche says it will continue enrolling patients in a separate study investigating the use of gantenerumab in patients with mild Alzheimer’s.

Germany’s
MorphoSys AG
, Roche’s partner in developing gantenerumab, called the discontinuation of the test “regrettable,” but added that two other tests of the drug were continuing, The company said it had a “very broad clinical pipeline” and wasn’t dependent on individual tests or compounds.

Nonetheless, shares of Morphosys fell more than 10% in late afternoon trading Friday.